Families braced for another year of financial gloom

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THREE-QUARTERS of families are bracing themselves for their finances to worsen or at best stagnate in 2013, research has found.

About 43 per cent of households predict that their situation will deteriorate next year, while just 24 per cent think they will see an improvement, a survey by financial information services company Markit said.

People aged between 55 and 64, working in the public sector or living in Wales, are the most likely to be downbeat about their prospects.

But despite the gloomy outlook, the pressure on families has eased off slightly compared with this time a year ago, the report said.

Overall, Markit’s household finance index stood at 36.8 in December, falling back from a 23-month high of 39.3 in November and pointing to a sharp squeeze on household budgets over the last month.

Readings above 50 signal that people’s finances are improving and those below it a deterioration.

While the latest figure is still a negative one, it shows a small improvement compared with December 2011’s reading of 34.3.

Analysts expect families to come under renewed pressure next year amid a string of price increases announced by energy companies, with increased food costs and rents also squeezing their budgets.

Markit said that around 32 per cent of households noted that their finances had got worse in December, compared with just 6 per cent who saw an improvement.

People in the oldest age category surveyed of 55-64 were by far the most pessimistic about next year. There are four times as many people in this age group who believe their situation will deteriorate as those who expect to see it get better.

This age group was also the most likely to believe their living costs are set to go up strongly.

Public-sector staff are more pessimistic than those in the private sector. Only people working in manufacturing are positive on balance about their prospects for the year ahead.

Those working in construction were found to be the most downbeat.

On a regional basis, households in Wales were found to be the most pessimistic, while those in south-west England were the least negative, followed by families in Scotland.

Tim Moore, senior economist at Markit, said: “Households are bracing themselves for yet another year of squeezed personal finances.

“The vast majority of households anticipate that their financial well-being will either worsen or stagnate next year.